PACRA Maintains Entity Ratings of Gharibwal Cement Limited

Lahore, May 04, 2018 (PPI-OT): The ratings reflect Gharibwal Cement’s sustained business profile appended by good sector dynamics. The company focuses on geographies closer to the plant location; Gujranwala division remained company’s home market – Lahore, Faisalabad and Multan are company’s next focus. Announced capacity expansion 1.0mln tons with contract finalized with a Chinese Supplier (CITIC HIC) is expected to strengthen Gharibwal’s position. Over last few years business profile has shown steady improvement – on account of strong demand.

However, margins declined during 1HFY18 mainly due to lower retention prices and increased international coal prices on average basis. Going forward, with translation of rupee depreciation, the margins are expected to remain under pressure. Continuation in demand trend and Gharibwal Cement’s ability to build requisite efficient supply chain remains important. The financial profile of the Company is expected to remain adequate. The leveraging is expected to increase in medium term in pursuit of expansion.

The ratings are dependent on upholding of the company’s business vis-a-vis financial risk profile. Any significant deterioration in the sector’s outlook particularly any unfavourable change in demand and expansion matrix, thereby exerting pressure on prices and margins, may negatively impact the ratings.